A Death Spiral? Consider Vermont

More thoughts on the theme of population growth, high taxes, environmental extremism, judicial ursurpationism, etc.

Conservatives believe certain propositions to be true, as a matter of faith. Most of these propositions stem from a basic knowledge of human nature. Other things being equal, people will choose to pay less for a product rather than more. (Just ask any Walmart customer) They will choose to pay lower taxes rather than higher. When making decisions on where to live, or how to act, they will consider the costs of their decisions.

Liberals disagree. They live in an asperational world, in which people act as the left thinks they should, rather than as human nature dictates they will. The left sees human nature as a problem to be overcome or ignored. That explains the almost inevitable failures of their policies.

Example: a number of years ago, a Congressman asked the federal agency in charge of "neutral" statistics to estimate the revenue resulting from imposing a 100% marginal rate on all incomes over $100,000. The entity earnestly replied that such policy would yield hundreds of billions per annum in additional tax revenue. This displays the static analysis, liberal mindset.

Of course, the correct answer is that it would yield NO additional revenue whatsoever; having reached the $100,000 level, no one affected by that tax would work another minute.

Evidence is already mounting that New Jersey’s insane levels of taxation are driving people away. As noted in a previous post, tens of thousands of citizens leave NJ each year. But for immigration from foreign countries, population would actually decline. Testimony offered before the Assembly Budget Committee last year indicated that evidence exists to demonstrate that border counties in PA are already providing a haven for tax refugees. Increasingly, those same counties will, likely, attract their employers, for precisely the same reasons.

These are entirely predictable results; conservatives predicted them. The Democrats challenged us to provide proof which, increasingly, is becoming self evident.

An article in The New York Times detailing the situation im Vermont should give us all pause. There, a combination of high taxes and serious environmental restrictions (as well as judicial arrogance; Vermont has its own Abbott, which hugely increased property taxes there, just as it did here) have produced a population bust. Vermont – lacking New Jersey’s urban areas – attracts relatively few immigrants. Like New Jersey, Vermont imposes a confiscatory 9.5% income tax rate. Unsurprisingly, the article notes that Vermont has lost high paying jobs and that young, well educated people, move elsewhere. Let’s see: young people get a college education, then leave for venues with lower taxes. Sound familiar?

Vermont’s simply further down the road to demographic disaster than is New Jersey. While it’s simply impossible to assess blame to only one cause, outrageous taxes – sometimes judicially imposed in the name of "equity" – create strong incentives for young, affluent folks – who prefer to spend their money on their own kids, not on government – to leave.

Consider the situation confronting a young, idealistic Princeton grad, with a new husband and contemplating a family. Stay in NJ and pay a property tax bill which approximates the annual GDP of some countries. Deal with a state which taxes anything which moves and many things which don’t, and which adopts policies, like the TTF, expressly designed to explode in a few years. Now, look across the free bridge to New Hope, Newtown, and other PA locales, boasting good schools (with much lower property taxes), an income tax rate one third to one half as high, and the possibility of being able to actually build a home without dealing with 143,279 DEP and Highlands bureaucrats.

It very much appears as if were losing precisely the sort of people – young, educated, and affluent – we should be trying to attract. The only significant job growth or retention results for massive subsidies, like those offered to Verizon. This looks very much like a death spiral.

It simply will not do to adopt policies in a vacuum, blithely unconcerned about the effects.

Of course, the problem serious students of policy face is that the left simply doesn’t care about long term consequences. Well, the politicians, anyway. They must serve the short term demands of the constituencies which elect them, to wit: urban residents, public employees, etc., those folks who benefit from massive taxpayer subsidies. That it will eventually implode concerns them essentially not at all; they’re focused on today’s subsidy. The TTF proposal demonstrates this conclusively. A flagrant abandonment of responsibility, it represents, perhaps, the wishful thinking that matters economic will improve sufficiently in five years to permit responsibility and political expediency to coexist.

A dynamic economy simply cannot coexist with confiscatory tax rates, ESPECIALLY when a readily available, attractive, low tax alternative exists a scant few hundred yards across a small stream. Tens of thousands of productive New Jersey residents vote with their feet each year, taking their incomes out of range of the apostles of the politics of envy.

The solution lies NOT with generous taxpayer subsidies to selected, favored employers (the employees may still choose to live in PA), but tax sanity – a tax rate which approximates that in PA. And the spending cuts necessary to achieve that salutary goal.